Bitcoin suddenly surges: reaching 1 trillion

Author: Qin Jin, Carbon Chain value

Bitcoin’s market value once again exceeded US$1 trillion after 2 years. Passing a critical hurdle in the bull market. On February 14, 14 years ago, Satoshi Nakamoto stated in an internal email that "in 20 years, Bitcoin will either have a very large transaction volume or no transaction volume."

February 14th is a special day that coincides with the Chinese God of Wealth and the Western Valentine's Day. Bitcoin rose to $52,000 that day, a single-day increase of 5.01%, and a single-day trading volume of $39.1 billion.

Driven by Bitcoin, digital currency concept stocks/blockchain concept stocks generally rose. Canaan Technology's ADR rose by more than 19%, Internet celebrity brokerage Robinhood opened 16% higher, the largest intraday increase since August 2022, Hut 8 rose by 12%, and MicroStrategy Investment MSTR, which holds a large number of Bitcoins, rose by 11.8%.

If ranked according to the market value of global listed companies, Bitcoin currently ranks eighth. If the global ranking is combined with the market capitalization of gold and silver, Bitcoin ranks tenth. The top few are: gold (13.46 trillion), Microsoft (3.02 trillion), Apple (2.84 trillion), Saudi Aramco (2.06 trillion), Nvidia (1.83 trillion), Google (1.82 trillion), Amazon (1.78 trillion), Silver (1.27 trillion), Meta (1.21 trillion).

Since January 11, the U.S. SEC has approved the applications of 11 Bitcoin spot ETF issuers. After ETF transactions, the trading volume of Bitcoin ETFs has increased with that of Bitcoin. Coin reserves are the focus data that the global investment circle pays special attention to. After all, Wall Street will be one of the important forces that cannot be ignored in dominating the Bitcoin market in the future. As of February 14, within the 23 trading days of the Bitcoin ETF, if the BTC previously reserved by Grayscale is included, 11 Bitcoin issuers currently hold a total of more than 700,000 Bitcoins. If you exclude the more than 460,000 Bitcoins held by Grayscale, the remaining 10 plus Bitcoin ETF issuers already hold more than 240,000 Bitcoins.

In terms of Bitcoin ETF trading volume, on February 14th, IBIT continued to be far ahead, leading other issuers. IBIT's single-day turnover was US$690 million, and GBTC's single-day turnover was US$591 million. FBTC’s single-day transaction volume was US$438 million. ARK’s single-day transaction volume was US$151 million. Market demand for Bitcoin is growing stronger. At present, the previous daily negative outflow of funds has turned into a daily positive inflow of funds.

According to CryptoQuant data, more than 75% of new investments into Bitcoin are entered through these Bitcoin ETFs. Since spot Bitcoin ETFs began trading on January 11, approximately $9.5 billion in new funds have been invested in the Bitcoin market through these ETFs. In a single day on February 13, there was a net inflow of US$651 million, which was the largest single-day inflow since the launch of the spot Bitcoin ETF.

This is one of the generally recognized reasons for the rise of Bitcoin.

The second reason is that US President Biden released photos of the "Dark Brandon Laser Eyes" emoticon package on social media with a narrative of the cultural context of the encrypted community. Make an impact on Bitcoin. Biden hopes to use Bitcoin's attention among young audiences in the U.S. crypto community to win their votes and support his candidacy for the next U.S. president. As President of the United States, some of Biden's words and deeds will have a significant impact on the Bitcoin market.

The third reason is the optimism in the crypto market caused by the Bitcoin halving. According to the historical cycle of Bitcoin halving, it will be halved every four years. 2024 will be the fourth halving of Bitcoin since its birth. The halving is expected to occur on April 23. The block height at the time of halving is 840000. The year after the first three Bitcoin halvings, Bitcoin prices hit all-time highs. In November 2021, the year after the last halving cycle, the price of Bitcoin hit a record high of $69,044. "Historically, every halving has resulted in some kind of bullish price behavior," said Reth Rhodes, former deputy director of the New York State Department of Financial Services. "That makes sense because you would expect that as supply constraints increase, Prices will naturally rise.

It is reported that in 2020, Bitcoin mining rewards dropped from 12.5 Bitcoins to 6.25 Bitcoins. This year, the mining reward will decrease from 6.25 Bitcoins to 3.125 Bitcoins. Leith-Rhodes said that in the two years before and after the first Bitcoin halving in 2012, the price of Bitcoin increased by approximately 30,000%. In 2016, the price of Bitcoin increased by nearly 800% in two years. With the 2020 halving, investors saw a 700% gain.

In addition, there seems to be another important channel for Bitcoin to obtain capital inflows. According to "Wall Street Insights", analysis pointed out that the inflow of funds received by Bitcoin seems to be at the expense of the outflow of funds from gold ETFs. Ahead of this week's U.S. CPI data, investors redeemed $858 million from gold ETFs last week, bringing gold outflows so far this year to $3.2 billion.

According to foreign media reports, the current schedule for the Federal Reserve's interest rate cut is highly uncertain, and its direct impact on the encryption market seems to be minimal. We will continue to pay attention to the latest developments from the Federal Reserve in the future. On February 4, Federal Reserve Chairman Powell said in a rare exclusive interview with CBS that he does not expect to cut interest rates in March and will have to cut interest rates after March. Other Fed officials have said that it would be appropriate for the Fed to cut interest rates 2-3 times in 2024.